Amid dipping demand, HSIIDC may go for 10% industrial plot price cut

CHANDIGARH : Faced with a poor demand for plots and its increasing liabilities, the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) is considering a 10% reduction in the allotment price of industrial plots in 10 industrial estates.

These sites are the corporation’s flagship Industrial Model Townships (IMTs) at Bawal, Rohtak and Faridabad, flatted factory at Faridabad, ManakpurII, Industrial Estates at Narwana, Panipat, Sirsa and Tohana and Industrial Growth Centre (IGC) at Saha.

The HSIIDC is facing cash crunch due to poor recovery from allottees, low demand for sites and huge liabilities to be paid by it due to enhanced land cost. It has accumulated a debt of about ₹12,000 crore, mainly on account of borrowings made for paying for the land acquired.

In fact, the debt equity ratio of the corporation stands at 8:1 as against the accepted ratio of 2:1, reflecting its poor financial condition.

“The reduction in prices has been approved by the board of directors and will come into effect unless a director objects. The measure is intended to increase the inflow of funds to the corporation and dispose of huge inventory piled up,” said a senior official.

PANEL RECOMMENDED REDUCTION IN PRICE

An HSIIDC monetisation committee while recommending reduction in plot prices had said the demand of industrial plots in 10 estates was not very encouraging. “In view of the current financial position of the corporation and mounting liabilities towards enhanced compensation as well as banks and financial institutions, there is an urgent need to offload the available inventory of industrial, residential, group housing, institutional and commercial sites,’’ the committee noted.

For instance, the corporation received only 48 applications in response to a May advertisement for allotment of 217 industrial plots at IMT, Faridabad. It received 18 applications for 157 plots advertised at IMT, Bawal, nine for 38 plots at IMT Rohtak, four for 315 plots advertised at Industrial Estate, Panipat. It did not receive a single application for 20 industrial sites at the Faridabad flatted factory complex, 165 sites at the industrial estate, Narwana, and 10 sites at the industrial estate, Sirsa.

HOTEL, SCHOOL, COMMERCIAL SITES TO COST LESS

Keeping in view the abysmal response it received in the auction of hotel, school and commercial sites, the Corporation also plans to cut down the prices to make these sites financially viable.

The monetisation committee has proposed that three hotel sites at IMT Manesar should be put for e-auction at initial reserve price of ₹67,500 per square metre as against the current reserve price of ₹81,000 per square metre. For a hotel site in Industrial Estates, Rai and Bahadurgarh, the committee has recommended reduction of reserve price by 33%. For school sites in Saha, Panipat, Sector 67, Faridabad, Manesar Phase II, Rohtak Phase II, the committee has recommended a 20% reduction in the reserve price. For shops, booths and shop-cum-office sites in Manesar, Bawal, Bahadurgarh, Kundli, Narnaul and Rai, it has recommended a 33 % reduction of the last discovered price.

CORPORATION IN DIRE NEED OF CAPITAL

The corporation, which remained cash rich till 2010-11 fiscal year, is under strain due to an annual interest burden of ₹1,000 crore on account of huge market borrowings in the last seven years. The servicing of interest on borrowings has become a serious challenge for the corporation.

Land acquisitions for IMT Kharkhauda (3,302 acre), Dharuhera (433 acre), Barwala Phase 2 (557 acre), IMT Manesar, Integrated Complex and Railway Sidings (365 acre), Global City interchange (147 acre), Integrated Multi-Modal Logistics Hub, Narnaul (1,208 acre) and MRTS project (304 acre) and award of enhanced compensation by the courts has forced the corporation to resort to borrowings in the form of long-term and short-term loans, and cash credit limit from the banks.

FACING CASH CRUNCH DUE TO POOR RECOVERY FROM ALLOTTEES AND LIABILITIES TO BE PAID BY IT DUE TO ENHANCED COST OF ACQUIRED LAND